Crypto Legislation Shakeup: US Senator Withdraws Support from Warren’s Controversial Bill

In a major shift for the cryptocurrency industry, U.S. Senator Roger Marshall has withdrawn his support from the Digital Asset Anti-Money Laundering Act (DAAMLA), a bill introduced by Democratic Senator Elizabeth Warren. Marshall’s decision highlights growing concerns over the potential overreach of regulatory measures on the burgeoning crypto market.

Marshall’s Shift: A Pro-Crypto Stance?

The DAAMLA Bill was initially introduced in December 2022 by Senator Warren, with Marshall as a co-sponsor, and reintroduced in July 2023. The legislation aimed to curb the illegal use of cryptocurrencies by integrating the sector into existing counterterrorism financing and anti-money laundering (AML) frameworks. It classified certain crypto service providers, such as miners, decentralized wallet providers, and validators, as financial institutions subject to the Bank Secrecy Act.

Warren argued that digital currencies like Bitcoin were being used by rogue nations, oligarchs, drug lords, and human traffickers to launder large sums of illegal funds, necessitating stricter regulatory oversight. However, the bill has faced substantial criticism from industry leaders and institutions who argue that it imposes excessive compliance requirements that could stifle innovation.

Industry Reaction and Legislative Impact

The withdrawal of support from Senator Marshall signals a significant victory for the digital asset community, which has been actively opposing the bill. Cody Carbone, Chief Policy Officer at the Digital Chamber, described the bill as a “backdoor ban on blockchain technology” due to its stringent compliance demands on miners and validators. Perianne Boring, the company’s founder and CEO, expressed her excitement, noting that it’s rare for a Senator to retract support from a bill they sponsored.

“This is a significant win for the digital asset community,” Boring said. “We only need one more Republican to withdraw support to prevent Senator Elizabeth Warren from claiming bipartisan backing.” Despite this development, 18 U.S. Senators still support the bill, indicating that the legislative battle is far from over.

Blockchain Association’s Opposition to DAAMLA

The positive shift comes after concerted efforts by the Blockchain Association, a trade group representing the crypto industry in Washington, D.C. In February, the Association sent a second letter to the House Financial Services Committee and Senate Banking Committee, outlining serious concerns about the bill. The letter was signed by approximately 80 U.S. military, national security, and intelligence officers, who argued that the legislation jeopardizes the U.S.’s strategic advantage and threatens tens of thousands of jobs without effectively targeting the illegal activities it aims to curb.

The broader crypto market has been closely watching these developments, with the overall market capitalization recently reaching $2.349 trillion. The outcome of this legislative battle could have far-reaching implications for the industry’s regulatory landscape and its growth trajectory in the United States.